Grammer AG (FRA:GMM): Poised For Long Term Success?

In March 2018, Grammer AG (FRA:GMM) released its earnings update. Generally, analyst consensus outlook appear vastly optimistic, as a 90.31% rise in profits is expected in the upcoming year, compared with the previous 5-year average growth rate of 7.46%. Currently with trailing-twelve-month earnings of €30.79m, we can expect this to reach €58.59m by 2019. Below is a brief commentary on the longer term outlook the market has for Grammer. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

See our latest analysis for Grammer

What can we expect from Grammer in the longer term?

The 7 analysts covering GMM view its longer term outlook with a positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of GMM’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

By 2021, GMM’s earnings should reach €65.29m, from current levels of €32.49m, resulting in an annual growth rate of 4.60%. EPS reaches €5.19 in the final year of forecast compared to the current €2.67 EPS today. Growth in the bottom line seems to suggest reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. Margins is currently sitting at 1.82%, which is expected to expand to 3.33% by 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Grammer, I’ve compiled three essential factors you should further research:

1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is Grammer worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Grammer is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Grammer? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.